Tax Surprises!

A

Achilles

Guest
Need some advice as I am not very financially aware!

I was operating as a sole trader for the last two years and found it very difficult to manage my finances ending up with a big tax bill at the end of the year. I decided to set up a company and am now a director of my own small architectural company with no employees other than myself. . I pay myself a monthly salary of €50,000 and pay my PAYE and PRSI (P30) each month.

I claim my expenses every 4 months i.e. mileage, subsistence and accommodation.

After paying my salary and basic company bills i.e. telephone, rent, stationary etc there is hardly any money left each month, so from what I can see I am not really making a profit but just earning an income. Actually my company owes me two outstanding salaries!

My questions are:

Even though I pay my monthly income tax, can I expect another company tax bill at the end of the year ?

I'm a bit nervous about the whole tax thing and don't want to end up with a huge bill!

Any advice would be appreciated!
 
If you have correctly calculated your yax and prsi liability, you should have no year-end payment and in fact you could get small refund if you have medical expenses, bin charges etc.

Of course if you have other income (rental etc.) you will have to pay this at year-end. (Also preliminary tax for next year.)

You should talk to your accountant / financial advisor as you don't seem to have a firm grasp of how to efficiently manage the financial side of your company. - No offense !!

Also, are you aware of your CRO obligations?
 
Achilles said:
Even though I pay my monthly income tax, can I expect another company tax bill at the end of the year ?"
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Yes, if the company has profits assessable to corporation tax.
Achilles said:
I'm a bit nervous about the whole tax thing and don't want to end up with a huge bill!
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Do you mean to say that you have formed and operated a limited company without advice on such basic matters?
 
I'm not surprised there's not much left over if you pay yourself a monthly salary of €50,000 (€600,000 p.a.)! I'll assume that's an annual salary of 50k, paid monthly..!

Get yourself an accountant to help you. You need to prepare annual accounts for your company anyway, and you need to file these ON TIME at the CRO to remain out of audit (assuming you are still out of the audit net).

If the company has paid out all of its income on expenses and salary, and there's nothing left over, then there will be no tax bill, but it really sounds like you need some accounting help and guidance as a priority.

Good luck
 
Thanks for that, yes my annual salary is €50,000 (typing error)!

Yes I have an accountant but its sometimes hard to get hold of her! I do need to sit down with my accountant and get some more guidance in these matters!
 
Just wondering, what part of salary is the cost you can put in the P&L: gross or gross mines prsi/paye ?
 
Nicky said:
Just wondering, what part of salary is the cost you can put in the P&L: gross or gross mines prsi/paye ?
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In the accounts of a limited company the directors salary is shown Gross, i.e. including PAYE/PRSI. Remember the company has paid you the net and has paid the PAYE/PRSI to the Revenue. The company cost therefore is the total.
 
You need to prepare annual accounts for your company anyway, and you need to file these ON TIME at the CRO to remain out of audit (assuming you are still out of the audit net).
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At the CRO? Is it not the revenue?

How does one stay "Out of the audit net" ?

Thanks
 
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